Subjects

Friday, February 1, 2013

Illinois Tax Loopholes - Aren't I Getting None?

Loopholes (aren’t I getting none?)

Noun:
(Dutch from liupen) Angular
cuts of slits and openings in the stone walls of castles or fortifications
which allowed an archer or soldier to look out and fire without being exposed
directly to enemy attack. Later uses
have evolved connotations of gaps or omissions that can be manipulated or
exploited.

While you and I were
sleeping:

Trying to get legislators and the Governor in Illinois to recognize
a structural revenue problem has not been an easy task; on the other hand, some
illumination at the end of the political tunnel glimmered this week with the
proposed amendment by Representative Naomi Jakobsson and Representative Linda
Chapa LaVia (thank you both) for a graduated income tax (HJCR0002). Don’t start buying party supplies yet, as one
veteran Representative recently warned me;
“The specific nature of such a change in the nature of income tax – if
it were to pass - is not yet anything more than nebulous.” Foggy or not, the proposal momentarily lifted
my spirits, but alas, then I forgot the nature of those who make law, at least
in our State of Illinois.

Wake Up Call:

Acting with the lethality of a hit squad less than a month ago, the Revenue
and Finance Committee of the House of Representatives of the General Assembly efficiently
garroted SB282, a bill that might have helped correct some of the structural
revenue deficit in Illinois. SB282 was
passed last November in the Senate and allowed for an actual and authentic
accounting of how much Illinois receives or loses from its powerful businesses
in their income taxes to our state. It would
have required companies to disclose in actual numbers (for the last two years)
tax income received and taxable income that got away. How would such disclosure help you?

The Recurrent Nightmare:

Every year, publicly traded businesses and corporations – like CME,
Sears, Boeing, etc. – arrive at the Governor’s
mansion and ask for tax breaks. When the
Governor pauses, the company representatives turn less solicitous (think Jekyll
and Hyde) and warn that their businesses will leave Illinois if they are not
given their demands for a tax handout.
The Governor wrings his hands, and he turns to his fellow legislators in
the General Assembly, and together they all perform a ritual dance not
dissimilar to the Kubler-Ross stages of dying, but they later all give in. Such is that last stage: resignation. Later on, when they find out a company like
Sears is closing its stores despite promises – or a company like Caterpillar is
moving some of its operations to another state with “right to work” laws – they
perform symbolic acts of hari-kari through bitter apologies and appearances of
shock/dismay. Note: all these are indeed
only figurative. No politician has ever been
actually harmed by these symbolic acts of contrition. In fact, Governor Quinn has become a stock
character in this recurrent drama.

On the other hand, neither the Governor nor the General Assembly can
tell truthfully whether or not a company like CME or Sears or Motorola is
sincerely in need of tax relief or simply taking advantage of the money trough
Illinois provides every year – a lucrative trough that is NOT open to the
thousands upon thousands of mom-and-pop businesses that cannot use their size
and Civic Committee influence to force a tax handout. Without really knowing what these company
ledgers look like, how much tax is collected or how much is lost, the
legislature and the administration in Illinois cannot respond with any sense of
true need or correctness. Influence,
weight, force, and threat become trump cards in such a climate.

By forcing publicly traded companies in Illinois to disclose their
tax information (income, holdings, payroll, etc.) SB282 would have given the
legislature, the Governor and the public a look at what large companies
in Illinois have paid dearly to be kept secret – just how much they actually
pay in income taxes and just how much they earn at the state level. Take for example a company like Boeing. According to the Institute on Taxation and
Economic Policy, an bi-partisan group that gleans through thousands of income and
tax documents on the federal level to ascertain an estimate of what companies
pay on the state level, Boeing pulled in a three-year profit of nearly $10
billion (2008-2010) but paid effectively no income taxes in at least one year;
in fact, a minus 1.8% in tax rebates and income subsidies for all three
years. Like you and me, state taxes are
determined by the federal form results, so Boeing in effect pays no taxes to
Illinois in state tax as its mysterious collection of accountants can create
ledgers that call for no taxes on the federal level ( http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf
).

Waking up:

What would be gained by having access to such information? Simply this:
knowing what these many corporations were making and what they actually
paid would make it a very different scenario when they (lobbyists) came to the
Governor’s mansion to ask for and then demand tax relief. There are many forms of loopholes, some
specific to Illinois, which we can discuss later in other blogs. But know this, without access to that information;
the General Assembly is as blind as you or me in determining whether a company
actually needs financial assistance in the form of a tax break.

Other groups like the Taxpayers Federation in Illinois warn that
this kind of inquiry can make the state “even less attractive” for job
growth. It’s a refrain, isn’t it?

If you’re wondering, like I was, what would possess the members of
the House Committee on Revenue and Finance to bury the possibility of such
disclosure, you might want to ask them.
I did. So far, only Representative
Barbara Flynn Currie has answered my request for information. As she was a co-sponsor with Senator John
Cullerton to pass SB282, she of course voted to move the bill to the
floor. The others have not told me why
they did or did not move the bill forward.
Let me know what you find out.

2 comments:

A gander at "Project Vote Smart" can shed a bit of light on the topic. The site, if you aren't familiar, reveals a lot of information on campaign contribution sources. Of the list you provide, Harris, McSweeney, and Sullivan are Republican. Bradley, Zalewsky , Turner, Evans, Currie, and Mautino are Democrats. Each of them, regardless of party affiliation takes money from both business and labor friendly sources. Though Currie seems to have voted her conscience in committee, at least five of them voted to suppress the disclosure of corporations who are buying deals from our state government.

Your quiet allusion to Willie Sutton in a previous post applies here too.Want to know why legislators vote on issues? It has to do with where the money is!

Thank you, Mike, for the insights and the site. Thus far, I have only heard back from Currie's and Turner's offices. Currie's was, as written, positive; Turner's has promised to get back to me. Nothing from anyone else yet, despite repeated contacts. Is this where I say, "I'm shocked?" But I will wait a bit longer and make a few more calls. All of the calls for tax reform or closing loopholes will do nothing if we cannot get beyond the first requirement of transparency.

Thanks for all your valuable contributions to this ongoing discussion.

About Me

I am a retiree, political activist, social advocate and community volunteer. I taught at Lyons Township High School in LaGrange for 34 years in the Language Arts classroom and worked as an administrator for several years. My current avocations include various community outreach and assistance programs. Having benefitted from employment in a collegial, reflective teaching environment that encouraged dedication and professionalism, I continue to seek the promotion of education at all levels as a long-term effort combining talent, perseverance, commitment, and constant professional growth - not a blind adherence to a business model of measured production.

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